Roger v. J. B. Levert Co.

237 F. 737, 150 C.C.A. 491, 1916 U.S. App. LEXIS 1986

• Court: Court of Appeals for the Fifth Circuit
• Decided: December 13, 1916
• Docket: No. 2920
• Status: Published

Opinion

PARDEE, Circuit Judge

(after stating the facts as above). [1-3] The order complained of in this case is said to be justified as against the position of the trustees on the ground of comity owing by the bankruptcy court to the state court.

The action pending in the state court between the Levert Company and the Moore Planting Company, at the time the latter filed, its petition in bankruptcy, was a personal action, although mortgage rights were involved. See article 12, La. Code of Prac.; Rogers v. Binyon, 124 La. 95, 49 South. 991; also, Ker v. Evershed, 41 La. Ann. 15, 6 South. 566. Such action could only have a semblance to a real action after an issuance of a writ of fieri facias and the seizure of the property on which the lien was claimed, and no writ of fieri facias had been issued, and of course no seizure thereunder. And it may be noticed that in the state of the litigation between the parties no writ of fieri facias could be taken out except at the pleasure and convenience of the Levert Company at any indefinite time within ten years after the rendition of the judgment.

At the time the Moore Company filed its petition in bankruptcy, said company was in full, undisturbed possession of all the plantations and property scheduled as assets in the bankruptcy; and, when the receivers were appointed, they took possession of all the property for the bankruptcy court, and they were in possession and control at the time the order complained of was entered.

The application of the Levert Company to the bankruptcy court for the appointment of one of their number as a co-receiver is a judicial admission of these facts, and it cannot be said that the bankruptcy court has seized and taken possession of property at the time in the possession 'and custody of the state court.

It seems therefore clear that, if we should concede that comity should prevail between the bankruptcy court and tire state court, the case presented does not show a proper and necessary case for the exercise of the same.

[4-7] But this is not a case for the application of the doctrine of comity between courts. Such comity only prevails as between courts of concurrent jurisdiction, and in this case there is no such concurrent jurisdiction. Moran v. Sturges, 154 U. S. 256-283, 14 Sup. Ct. 1019, 38 L. Ed. 981; Pugh v. Loisel, 219 F. 417-423, 135 C. C. A. 221, L. R. A. 1915F, 945.

It is well settled that, under the Constitution and laws of the United States, bankruptcy courts are vested with superior and exclusive jurisdiction in the administration of the estate of the bankrupt. Section 11 of the Bankruptcy Law gives authority to the bankruptcy court to stay proceedings in actions against the bankrupt pending in other courts.

Any property surrendered by the bankrupt which could or should be released by the court from such administration can only be property in which, by reason of conceded and absorbing superior liens and privileges, the trustees in bankruptcy have no equity.

In the present case, the record fully shows that by reason of the set-off and counterclaim,of Moore Company against the Levert Company, provided for in section 68, Bankruptcy Law, and which could not be allowed in the state court, as well as by reason of the situation and prospects for the successful prosecution of the plantations in making and harvesting the crops of the present year, a very decided equity is shown in favor of the bankrupt’s estate.

It follows that the order complained of cannot be sustained on the ground of comity, nor on the facts of the case as to the want of equity on the part of the trustees.

The petition to superintend is granted, and it is ordered and adjudged that the order of April 14, 1916, permitting the Revert Company to proceed in the state court, and practically turning over the property of the bankrupt to be administered in the state court, be, and the same is, vacated.